UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2020March 31, 2021
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 001-13126
FOMO CORP.
(Exact name of small business issuer as specified in its charter)
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| CALIFORNIA | 5511 | 83-3889101 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
1 E Erie St, Ste 525 Unit #2250, Chicago, IL 60611
(Address of principal executive offices)
(630) 286-9560
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] | ||
| Non-accelerated filer [ ] | Smaller reporting company [X] Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The number of shares of Common Stock (no par value) of the registrant outstanding was 4,688,543,121 as of December 28, 2020.x,xxx,xxx,xxx at May 3, 2021. The number of shares of Series A Preferred Stock ($0.0001 par value and that each convert into one share of common stock) of the registrant outstanding was 3,000,000 asx,xxx,xxx at May 24, 2021 no par value. The number of December 28, 2020. Theshares of Series B Preferred Stock ($0.0001 par value and that each convert into 50 shares of common stock) of the registrant outstanding was x,xxx,xxx,xxx at May 24, 2021The number of shares of Series B Preferred Stock ($0.0001 par value and that each convert into 1,000 shares of common stock) of the registrant outstanding was 4,170,065 as of December 28, 2020.x,xxx,xxx,xxx at May 24, 2021. The number of shares of Series C Preferred Stock ($0.0001 par value and that each convert into one share of common stock) of the registrant outstanding was 1,000,000 as of December 28, 2020.at May 24, 2021. The market value of common shares outstanding as of December 28, 2020May 24, 2021 was $4,688,543.
$x,xxx,xxx.
FOMO CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 20202019
TABLE OF CONTENTS
| 2 |
FOMO CORP.
INDEX TO FINANCIAL STATEMENTS
| 3 |
FOMO CORP and Subsidiary
(Formerly 2050 Motors, Inc.)
(Unaudited)
As of As of September 30, 2020 December 31, 2019 Assets Current assets Cash - 63 Total current assets - 63 Other assets: Investments 232,340 189,000 Deposit 50,000 - Total assets $ 282,340 $ 189,063 Liabilities and stockholders’ deficit Liabilities Current liabilities Bank over draft $ 114 $ - Accounts payable 10,500 5,500 Accrued expenses 25,009 62,510 Loans payable due to non-related parties, net 143,249 187,798 Loan settlement 260,000 260,000 Loan CARES Act 11,593 Deposits 21,947 21,947 Derivative liablity 363,261 893,171 Total current liabilities 835,673 1,430,926 Total liabilities 835,673 1,430,926 Stockholders’ deficit Common stock; no par value authorized: 3,000,000,000 shares at September 30, 2020 and December 31, 2019, respectively: issued and outstanding 2,875,974,986 at September 30, 2020 and 1,777,198,805 at December 31, 2019 respectively 3,885,791 3,800,405 Preferred stock Class A; $0.0001 par value authorized: 3,000,000 shares at September 30, 2020 and December 31, 2019, respectively: issued and outstanding 3,000,000 at September 30, 2020 and December 31, 2019, respectively: discretionary 1% dividend 300 300 Preferred stock Class B; $0.0001 par value authorized: 6,000,000 shares at September 30, 2020 and December 31, 2019, respectively: issued and outstanding 2,405,916 and 400,000 at September 30, 2020 and December 31, 2019,respectively: discretionary 1% dividend 241 40 Preferred stock Class C; $0.0001 par value authorized: 1,000,000 shares at September 30, 2020 and December 31, 2019, respectively: and issued and outstanding 1,000,000 and 1,000,000 at September 30, 2020 and December 31, 2019, respectively: discretionary 1% dividend 100 100 Additional paid-in-capital 1,306,828 858,218 Accumulated deficit (5,871,593 ) (6,025,926 ) Common stock issuable 125,000 125,000 Total stockholders’ deficit (553,333 ) (1,241,863 ) Total liabilities and stockholders’ deficit $ 282,340 $ 189,063
| As of | As of | |||||||
| March 31, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 269,002 | $ | 12,069 | ||||
| Accounts reveivable | 86,993 | 20,859 | ||||||
| Deposit on option to purchase business | 17,500 | - | ||||||
| Prepaid expense | - | 910 | ||||||
| Total current assets | 373,495 | 33,838 | ||||||
| Other assets: | ||||||||
| Investments | 168,000 | 168,000 | ||||||
| Intangible assets | 1,378,662 | 206,250 | ||||||
| Goodwill | 596,906 | 596,906 | ||||||
| Total other assets | 2,143,568 | 971,156 | ||||||
| Total assets | $ | 2,517,063 | $ | 1,004,994 | ||||
| Liabilities and stockholders’ deficit | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 46,239 | $ | 63,291 | ||||
| Accrued intertest on loans payable | 3,932 | 24,945 | ||||||
| Customer deposit | 97,048 | 5,614 | ||||||
| Loan payable related party | 7,532 | 3,574 | ||||||
| Loans payable due to non-related parties, net | 205,000 | 226,186 | ||||||
| Loan Cares PPP | 11,593 | 11,593 | ||||||
| Derivative liablity | 2,209,605 | 834,230 | ||||||
| Total current liabilities | 2,580,949 | 1,169,433 | ||||||
| Total liabilities | 2,580,949 | 1,169,433 | ||||||
| Stockholders’ deficit | ||||||||
| Common stock; no par value authorized: 10,000,000,000 issued and outstanding 5,700,528,159 at March 31, 2021 and 4,713,543,121 December 31, 2020, respectively | 5,166,243 | 4,232,960 | ||||||
| Preferred stock Class A; $0.0001 par value authorized: 78,000,000 issued and outstanding 5,750,000 and 3,000,000 at March 31, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 575 | 300 | ||||||
| Preferred stock Class B; $0.0001 par value authorized: 20,000,000 issued and outstanding 5,313,815 and 4,463,815 at March 31, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 531 | 446 | ||||||
| Preferred stock Class C; $0.0001 par value authorized: 2,000,000 and issued and outstanding 1,000,000 at March 31, 2021 and December 31, 2020, respectively: discretionary 1% dividend | 100 | 100 | ||||||
| Additional paid-in-capital | 4,695,540 | 3,139,400 | ||||||
| Accumulated deficit | (10,051,875 | ) | (7,662,645 | ) | ||||
| Common stock issuable | 125,000 | 125,000 | ||||||
| Total stockholders’ deficit | (63,886 | ) | (164,439 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 2,517,063 | $ | 1,004,994 | ||||
The accompanying notes are an integral part of these financial statements
| 4 |
FOMO CORP and Subsidiary
CondenseCondensed Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Operating revenue $ - $ - $ - $ - Operating expenses: General and administrative 215,372 51,086 314,646 122,683 Net loss from operations (215,372 ) (51,086 ) (314,646 ) (122,683 ) Other income (expenses) Interest expense (33,206 ) (26,923 ) (64,930 ) (210,182 ) Income (loss) on investment 42,000 - (21,000 ) (130,000 ) Derivative liability gain (loss) (150,173 ) 70,735 529,909 590,616 Debt settlement gain (loss) 25,000 - 25,000 226,299 Total other income (expenses) (116,379 ) 43,812 468,979 476,733 Income (loss) before income taxes (331,751 ) (7,274 ) 154,333 354,050 Provision for income taxes - - - - Net income (loss) $ (331,751 ) $ (7,274 ) $ 154,333 $ 354,050 Net income (loss) per share, basic and diluted $ (0.0001 ) $ (0.0000 ) $ 0.0001 $ 0.0004 Weighted average common equivalent share outstanding, basic and diluted 2,344,262,083 1,353,224,099 2,202,595,038 927,613,724
| For the Three Months Ended March 31, | ||||||||
| 2020 | 2020 | |||||||
| Operating revenue | $ | 151,392 | $ | - | ||||
| Cost of revenue | 132,221 | - | ||||||
| Gross profit | 19,171 | - | ||||||
| Operating expenses: | ||||||||
| General and administrative | 589,785 | 50,532 | ||||||
| Net loss from operations | (570,614 | ) | (50,532 | ) | ||||
| Other income (expenses) | ||||||||
| Interest expense | (211,312 | ) | (10,551 | ) | ||||
| Debt Settlement | (231,930 | ) | - | |||||
| Impairment loss | - | (63,000 | ) | |||||
| Derivative liability gain (loss) | (1,375,374 | ) | 483,793 | |||||
| Total other income (expenses) | (1,818,616 | ) | 410,242 | |||||
| Income (loss) before income taxes | (2,389,230 | ) | 359,710 | |||||
| Provision for income taxes | - | - | ||||||
| Net income (loss) | $ | (2,389,230 | ) | $ | 359,710 | |||
Net income (loss) per share, basic and diluted | $ | - | $ | - | ||||
Weighted average common equivalent share outstanding, basic and diluted | 5,445,268,799 | 2,053,310,893 | ||||||
The accompanying notes are an integral part of these financial statements
| 5 |
FOMO CORP and Subsidiary
(Formerly 2050 Motors, Inc.)
Condensed Statement of Stockholders’ Deficit
(Unaudited)
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Class C | ||||||||||||||||||||||||||||||||||||||||||||||
| Number | No | Number | $0.0001 | Number | $0.0001 | Number | $0.0001 | Common | Additional | Total | ||||||||||||||||||||||||||||||||||||||
of Shares | par value | of Shares | par value | of Shares | par value | of Shares | par value | Stock Issuable | paid-in capital | Accumulated deficit | stockholders’ deficit | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2018 | 623,964,144 | $ | 3,405,360 | 3,000,000 | $ | 45,000 | - | $ | - | - | $ | - | $ | 125,000 | $ | 536,356 | (5,960,691 | ) | $ | (1,848,975 | ) | |||||||||||||||||||||||||||
| Conversion of convertible debt | 98,106,500 | 28,210 | - | - | - | - | - | - | - | - | - | 28,210 | ||||||||||||||||||||||||||||||||||||
| Net loss | (959,091 | ) | (959,091 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2019 | 722,070,644 | 3,433,570 | 3,000,000 | 45,000 | - | - | - | - | 125,000 | 536,356 | (6,919,782 | ) | (2,779,856 | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | 84,541,300 | 84,541 | - | - | - | - | - | - | - | (26,601 | ) | - | 57,940 | |||||||||||||||||||||||||||||||||||
| Preferred Stock no par returned | - | - | (3,000,000 | ) | (45,000 | ) | - | - | - | - | - | - | - | (45,000 | ) | |||||||||||||||||||||||||||||||||
| Preferred CL A Stock issued for investment | - | - | 3,000,000 | 300 | - | - | - | - | - | 44,700 | - | 45,000 | ||||||||||||||||||||||||||||||||||||
| Preferred CL B Stock issued for investment | - | - | - | - | 400,000 | 40 | - | - | - | 423,960 | - | 424,000 | ||||||||||||||||||||||||||||||||||||
| Preferred CL C Stock issued for investment | - | - | - | - | - | - | 1,000,000 | 100 | - | - | - | 100 | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | 1,322,707 | 1,322,707 | ||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2019 | 806,611,944 | 3,518,111 | 3,000,000 | 300 | 400,000 | 40 | 1,000,000 | 100 | 125,000 | 978,415 | (5,597,075 | ) | (975,109 | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | 897,783,861 | 136,773 | - | - | - | - | - | - | - | - | - | 136,773 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (7,274 | ) | (7,274 | ) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2019 | 1,704,395,805 | $ | 3,654,884 | 3,000,000 | $ | 300 | 400,000 | $ | 40 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 978,415 | $ | (5,604,349 | ) | $ | (845,610 | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2019 | 1,777,198,805 | $ | 3,800,405 | 3,000,000 | $ | 300 | 400,000 | $ | 40 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 858,218 | $ | (6,025,926 | ) | $ | (1,241,863 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | 428,306,667 | 22,582 | - | - | - | - | - | - | - | - | - | 22,582 | ||||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | - | - | - | - | - | 5,781 | - | 5,781 | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | 359,710 | 359,710 | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | 2,205,505,472 | 3,822,987 | 3,000,000 | 300 | 400,000 | 40 | 1,000,000 | 100 | 125,000 | 863,999 | (5,666,216 | ) | (853,790 | ) | ||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | - | - | - | - | - | 5,781 | - | 5,781 | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | 126,374 | 126,374 | ||||||||||||||||||||||||||||||||||||
| Balance June 30, 2020 | 2,205,505,472 | 3,822,987 | 3,000,000 | 300 | 400,000 | 40 | 1,000,000 | 100 | 125,000 | 869,780 | (5,539,842 | ) | (721,635 | ) | ||||||||||||||||||||||||||||||||||
| Conversion of convertible debt | 670,469,514 | 62,804 | - | - | - | - | - | - | - | - | - | 62,804 | ||||||||||||||||||||||||||||||||||||
| Preferred series B stock issued for services | - | - | - | - | 250,000 | 25 | - | - | - | 154,975 | - | 155,000 | ||||||||||||||||||||||||||||||||||||
| Preferred series B stock issued for accrued compensation | - | - | - | - | 1,495,065 | 150 | - | - | - | 161,915 | - | 162,065 | ||||||||||||||||||||||||||||||||||||
| Preferred series B stock issued for deposit on asset purchase | - | - | - | - | 100,000 | 10 | - | - | - | 49,990 | - | 50,000 | ||||||||||||||||||||||||||||||||||||
| Preferred series B stock issued for investment | - | - | - | - | 160,851 | 16 | - | - | - | 64,324 | - | 64,340 | ||||||||||||||||||||||||||||||||||||
| Warrants | - | - | - | - | - | - | - | - | - | 5,844 | - | 5,844 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (331,751 | ) | (331,751 | ) | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | 2,875,974,986 | $ | 3,885,791 | 3,000,000 | $ | 300 | 2,405,916 | $ | 241 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 1,306,828 | $ | (5,871,593 | ) | $ | (553,333 | ) | ||||||||||||||||||||||||||
| Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Class C | Common | Additional | Total | |||||||||||||||||||||||||||||||||||||||||||
| Number | No | Number | $0.0001 | Number | $0.0001 | Number | $0.0001 | Stock | paid-in | Accumulated | stockholders’ | |||||||||||||||||||||||||||||||||||||
| of Shares | par value | of Shares | par value | of Shares | par value | of Shares | par value | Issuable | capital | deficit | deficit | |||||||||||||||||||||||||||||||||||||
| Balance December 31, 2019 | 1,777,198,805 | $ | 3,800,405 | 3,000,000 | $ | 300 | 400,000 | $ | 40 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 858,218 | $ | (6,025,926 | ) | $ | (1,241,863 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | 428,306,667 | 22,582 | - | - | - | - | - | - | - | - | - | 22,582 | ||||||||||||||||||||||||||||||||||||
| warrants | - | - | - | - | - | - | - | - | - | 5,781 | - | 5,781 | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | 359,710 | 359,710 | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | 2,205,505,472 | $ | 3,822,987 | 3,000,000 | $ | 300 | 400,000 | $ | 40 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 863,999 | $ | (5,666,216 | ) | $ | (853,790 | ) | ||||||||||||||||||||||||||
| Balance December 31, 2020 | 4,713,543,121 | $ | 4,232,960 | 3,000,000 | $ | 300 | 4,463,815 | $ | 446 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 3,139,400 | $ | (7,662,645 | ) | $ | (164,439 | ) | ||||||||||||||||||||||||||
| Conversion of convertible debt | 905,435,038 | 563,643 | - | - | - | - | - | - | - | - | - | 563,643 | ||||||||||||||||||||||||||||||||||||
| Stock issued for compensation | 6,550,000 | 99,640 | - | - | - | - | - | - | - | - | - | 99,640 | ||||||||||||||||||||||||||||||||||||
| Stock issued for loan cost | 10,000,000 | 20,000 | - | - | - | - | - | - | - | - | - | 20,000 | ||||||||||||||||||||||||||||||||||||
| Purchase common share | 65,000,000 | 250,000 | - | - | - | - | - | - | - | - | - | 250,000 | ||||||||||||||||||||||||||||||||||||
| Purchase Preferred A shares | - | - | 2,750,000 | 275 | - | - | - | - | - | 274,725 | - | 275,000 | ||||||||||||||||||||||||||||||||||||
| Stock issued for compensation | - | - | - | - | 300,000 | 30 | - | - | - | 123,970 | - | 124,000 | ||||||||||||||||||||||||||||||||||||
| Options to purchase business | - | - | - | - | 175,000 | 17 | - | - | - | 38,483 | - | 38,500 | ||||||||||||||||||||||||||||||||||||
| Purchase assets | - | - | - | - | 375,000 | 38 | 924,962 | 925,000 | ||||||||||||||||||||||||||||||||||||||||
| Warrents | - | - | - | - | - | - | - | - | - | 194,000 | 194,000 | |||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | (2,389,230 | ) | (2,389,230 | ) | ||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | 5,700,528,159 | $ | 5,166,243 | 5,750,000 | $ | 575 | 5,313,815 | $ | 531 | 1,000,000 | $ | 100 | $ | 125,000 | $ | 4,695,540 | $ | (10,051,875 | ) | $ | (63,886 | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
| 6 |
FOMO CORP and Subsidiary
(Formerly 2050 Motors, Inc.)
Condensed Statement of Cash Flows
(Unaudited)
Nine Months Ended September 30, 2020 September 30, 2019 Cash flows provided by (used for) operating activities: Net income (loss) $ 154,333 $ 354,050 Adjustments to resoncile net loss to net cash provided by (used for) operating activities: Amortization of debt discount - 244,085 Loss on investment 21,000 130,000 Debt settlement (income) loss (25,000 ) (226,299 ) Issuance of common stock and warrants for services 172,406 (100 ) Derivative liability adjustment (529,909 ) (583,032 ) Increase (decrease) in assets and liabilities: Accounts payable 5,000 4,751 Accrued expenses 190,400 14,301 Tax payable - (2,864 ) Net cash used for operating activities (11,770 ) (65,108 ) Cash flows provided by (used for) Investing activities Cash flows provided by (used for) Financing activities Bank overdraft 114 - Proceeds from non-related loans - 75,190 Proceeds from CARES Act loan 11,593 - Net cash provied by (used for) financing activities 11,707 75,190 Net (decrease) increase in cash (63 ) 10,082 Cash, beginning of period 63 1 Cash, end of period $ - $ 10,083 Supplemental disclosure of cash flow information Common stock issued for debt $ 85,386 $ 28,819 Preferred stock issued for accrued compensation $ 187,065 $ - Preferred stock issued for deposit on asset purchase $ 50,000 $ - Preferred stock issued for investment $ 64,330 $ - Debt discount from convertible loan $ - $ 40,500 Reclassification of derivative liabilitiy $ - $ 39,852
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows provided by (used for) operating activities: | ||||||||
| Net income (loss) | $ | (2,389,230 | ) | $ | 359,710 | |||
| Adjustments to resoncile net loss to net cash provided by (used for) operating activities: | ||||||||
| Stock based compensation | 165,500 | 5,781 | ||||||
| Stock issued for Interest and loan costs | 37,940 | |||||||
| Interreset expense paid by issuance of stock | 220,527 | |||||||
| Amortization | 43,583 | - | ||||||
| Interest expense from initial derivative liability | - | 926 | ||||||
| Derivative liability adjustment | 1,375,375 | (483,793 | ) | |||||
| Debt settlement | 231,930 | |||||||
| Impairment of investment | - | 63,000 | ||||||
| Increase (decrease) in assets and liabilities: | ||||||||
| Prepaid expenses | 910 | - | ||||||
| Accounts reveivable | (66,134 | ) | - | |||||
| Accounts payable | (39,047 | ) | 5,000 | |||||
| Customer deposits | 91,434 | |||||||
| Accrued interest | (21,013 | ) | ||||||
| Accrued expenses | 49,331 | |||||||
| Net cash used for operating activities | (348,225 | ) | (45 | ) | ||||
| Cash flows provided by (used for) Investing activities | ||||||||
| Proceeds from sale of common stock | 250,000 | - | ||||||
| Proceeds from sale of Preferred Series A shares | 275,000 | - | ||||||
| Net cash provied by (used for) investing activities | 525,000 | - | ||||||
| Cash flows provided by (used for) Financing activities | ||||||||
| Payment to non-related loans | (128,800 | ) | - | |||||
| Proceeds from loan from officer | 3,958 | - | ||||||
| Proceeds from non-related loans | 205,000 | - | ||||||
| Net cash provied by (used for) financing activities | 80,158 | - | ||||||
| Net (decrease) increase in cash | 256,933 | (45 | ) | |||||
| Cash, beginning of period | 12,069 | 63 | ||||||
| Cash, end of period | $ | 269,002 | $ | 18 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Common stock issued for debt | $ | 563,643 | $ | - | ||||
The accompanying notes are an integral part of these financial statements
| 7 |
FOMO CORPCORP. and subsidiaries
(Formerlyformerly 2050 MOTORS, INC.)
NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS
Note 1 – BASIS OF PRESENTATION AND ORGANIZATION
2050FOMO CORP. previously known as “2050 Motors, Inc.” (“2050 Motors” or “thethe Company”) is the successor to an entity incorporated on April 22, 1986 in the state of California. 2050 Motors, Inc., the Company’s sole operating subsidiary by the same name,from 2014-2019, was incorporated on October 9, 2012 in the state of Nevada to import, market, and sell electric cars manufactured in China. In 2019, management dissolved the Company’s Nevada subsidiary as the electric vehicle (“EV”) strategies had failed. Meanwhile, the Company incubated an internet business targeting the Cannabis market @ www.kanab.club and pursued various ventures in the internet, communications, and technology markets. The Company purchased Purge Virus, LLC to enter the viral disinfection market on October 19, 2020, has since closed lighting and energy management acquisitions, and has announced several letters of intent (“LOI’s”) and signed several definitive agreements to acquire additional technology and services businesses.
On May 2, 2014,14, 2019, we dissolved our 2050 Motors, Inc. (Nevada) sold its business, operationsNevada subsidiary and assetsterminated all discussions and contractual relationships with Chinese manufacturers.
On December 16, 2019, we changed our company name to “FOMO CORP.” with the Company, whose sole business atSecretary of State of California on the time wasSEC’s EDGAR system. On November 17, 2020, we applied for a name change with FINRA and have responded to identify, evaluate, and investigate various companies to acquire or with which to merge. Upon consummation of the acquisition of 2050 Motors, Inc., the Company’s sole business became the business of the Company and the public Company renamed itself “2050 Motors, Inc.”comments several times.
On October 25, 2012, 2050 Motors19, 2020, FOMO CORP purchased Purge Virus, LLC and consequently entered into an agreement with Jiangsu Aoxin New Energy Automobile Co., Ltd., (“Aoxin”), located in Jiangsu, China, for the distribution in the United States of a new electric automobile, known as the “e-Go”. This Agreement was amended in 2017 to exclude certain markets in Central America and South America. Our principal business objective has historically been to achieve long-term growth through 2050 Motors, Inc.viral disinfection market.
On or around March 6, 2019, William Fowler resigned as our CEONovember 17, 2020, an application was submitted to FINRA to change the name and Director and Bernd Schaefers resigned as our Director. On or around March 6, 2019, we appointed Vikram Grover as CEO and sole Director (for further information, refer to our Form 8-K filed on March 7, 2019 with the SEC).
On or around March 6, 2019, as part of its management transition plan, the Company agreed to transfer to prior Management eighty (80) percent ownership of its Nevada subsidiary,ticker symbol from 2050 Motors (“2050 Private” or “TFPC”) in exchange forand ETFM to FOMO CORP. and FOMO, respectively. Subsequently, FINRA issued a corporate note from TFPC inname change and ticker change to “FOMO CORP.” and applied the amount of fifty thousand dollars at 8% interest per annum to be paid out of net profits. 2050 Motors (2050 Public) agreed to appoint William Fowler as President of 2050 Private to raise operating capital for expenses to negotiate terms and conditions to maintain Exclusive License with Aoxin Motors. Subsequent to the change of control and based on due diligence on TFPM and the status of the Aoxin Motors relationship, on or around April 2, 2019, we terminated the transaction as we deemed that it was not in the best interests of shareholders. We continue to demand information regarding TFPC from former management but have received unresponsive and unsatisfactory responses to our inquiries.
On May 2, 2019, we engaged Markup Designs Pvt. Ltd. (“MDPL”; https://www.markupdesigns.com), a global Web and mobile application development company, to design and build a social network to be named “KANAB CLUB” (www.kanab.club) targeting the global cannabis market. On May 13, 2019, we completed an initial payment to MDPL, mandating them to deploy a home page with launch information and sign-up capabilities for customers and to complete a working Web platform during summer and fall 2019. After coding industry-standard social media functionality, we intend to add an online marketplace, 420 dating services, discussion forums, rewards programs/points including potential utility crypto coins, differentiated advertising and navigation capabilities, and Android/iOS mobile applications to the platform.
Since new management was appointed in March 2019, we have expanded our mission statement to invest in, incubate and accelerate businesses in the communications, energy, electric vehicle, and Internet industries (for further information, see Note 12 - Subsequent Events, and our previously filed Form 8-K, 10-Q and 10-K filings with the Securities and Exchange Commission)ticker “FOMC”.
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of Estimates
The preparation of financial statements in conformity with U.S.US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include accounts payable, the recoverability of long-term assets, and the valuation of derivative liabilities.
Consolidation
The consolidated financial statements of the Company include the Company and its wholly owned subsidiary, Purge Virus, LLC. All material intercompany balances and transactions have been eliminated in consolidation.
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Cash
Cash consists of deposits in one large national bank. On March 31, 2021 and December 31, 2020, respectively, the Company had $269,002 and $12,069 in cash in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash accounts payable, accrued liabilities, short-term debt, and derivative liability, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value Measurements and Disclosures,”, which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy are defined as follows:
Level 1 inputsinput to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
The Company’s investment in Mobicard Inc., see Note 4, is actively traded on the pink sheets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Derivative Financial Instruments-Level 3The Company’s analyses of all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
Derivatives areWe have recorded the conversion option on notes as a derivative liability because of the variable conversion price, which in accordance with U.S. GAAP, prevents them from being considered as indexed to our stock and qualified for an exception to derivative accounting.
We recognize derivative instruments as either assets or liabilities on the condensedaccompanying balance sheetsheets at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the balance sheet withWe record changes in fair value recognized during the period of change as a separate component of other income/expense. We use the binomial option-pricing model for determining the fair value of our derivatives. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selectionthe derivatives in the accompanying statement of these inputs involves management’s judgment and may impact net income.operations.
Assets and liabilities measured at fair value are as follows as of September 30, 2020March 31,2021:
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Investments | $ | 232,340 | $ | 232,340 | $ | - | $ | - | ||||||||
| Total assets measured at fair value | $ | 232,340 | $ | 232,340 | $ | - | $ | - | ||||||||
| Liabilities | ||||||||||||||||
| Derivative liability | $ | 363,261 | $ | - | $ | - | $ | 363,261 | ||||||||
| Total liabilities measured at fair value | $ | 363,261 | $ | - | $ | - | $ | 363,261 | ||||||||
| Total | Level 1 | Level 2 | Level 4 | |||||||||||||
| Assets | ||||||||||||||||
| Investments | 168,000 | 168,000 | ||||||||||||||
| Total assets measured at fair value | 168,000 | 168,000 | ||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liability | 2,209,605 | 2,209,605 | ||||||||||||||
| Total liabilities measured at fair value | 2,209,605 | 2,209,605 | ||||||||||||||
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Assets and liabilities measured at fair value are as follows as of December 31, 2019:2020:
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 4 | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Investments | $ | 189,000 | $ | 189,000 | $ | - | $ | - | 168,000 | 168,000 | ||||||||||||||||||||||
| Total assets measured at fair value | $ | 189,000 | $ | 189,000 | $ | - | $ | - | 168,000 | 168,000 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Derivative liability | $ | 893,171 | $ | - | $ | - | $ | 893,171 | 834,230 | 834,230 | ||||||||||||||||||||||
| Total liabilities measured at fair value | $ | 893,171 | $ | - | $ | - | $ | 893,171 | 834,230 | 834,230 | ||||||||||||||||||||||
The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:
| Balance as of December 31, 2019 | $ | 893,171 | ||
| Fair value of derivative liabilities issued | 134,115 | |||
| Loss on change in derivative liabilities | (647,043 | ) | ||
| Reclassify to equity upon payoff or conversion | (16,982 | ) | ||
| Balance as of September 30, 2020 | $ | 363,261 |
| Balance as of December 31, 2019 | $ | 893,171 | ||
| Fair value of derivative liabilities | 266,068 | |||
| Loss on conversion | (483,793 | ) | ||
| Gain on change in derivative liabilities | 158,784 | |||
| Balance as of December 31, 2020 | $ | 834,230 | ||
| Balance as of December 31, 2020 | $ | 834,230 | ||
| Fair value of derivative liabilities | 2,750,749 | |||
| Loss on conversion | (1,375,374 | ) | ||
| Gain on change in derivative liabilities | 0 | |||
| Balance as of March 31, 2021 | $ | 2,209,605 |
Earnings Per Share (EPS)
Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumptionassumes that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). During the year ended December 31, 20192020 and nine months ended September 30, 2020,2019, the Company generated no revenues and incurred substantial losses, of which the vast majority were due to mostly non-cash charges for accrued interest, penalties and derivative charges related to convertible debt instruments. Therefore, the effect of any common stock equivalents on EPS is anti-dilutive during those periods.
Concentration of Credit Risk
Cash is mainly maintained by one highly qualified institution in the United States. At no time were such amounts in excess ofmore than federally insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
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Recently Adopted Accounting Policies:
ReclassificationIncome Taxes
Certain prior yearThe Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts have been reclassified for consistencyat each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
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On March 31, 2021 and December 31, 2020, the Company had not taken any significant uncertain tax positions on its tax returns for the period ended December 31, 2020 and prior years or in computing its tax provisions for any years. Prior management considered its tax positions, and believed that all of the positions taken by the Company in its Federal and State tax returns were more likely than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from inception to present, generally for three years after they are filed. New management, which took control of the Company on March 5, 2019, has filed federal and state taxes in California, Illinois and Pennsylvania as required and had brought the Company current period presentation. These reclassifications had no material effectin all regards.
Concentration of Credit Risk
Cash is mainly maintained by one highly qualified institution in the United States. At various times, such amounts are more than federally insured limits. Management does not believe that the Company is subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. The Company has not experienced any losses on our deposits of cash.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of March 31, 2021 and December 31, 2020 was zero.
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Revenue Recognition
The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with Customers. Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers.
Stock-Based Compensation
The Company accounts for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted to employees is estimated on the reported resultsdate of operations or cash flow.the grant using the Black-Scholes option-pricing model and the related stock-based compensation expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award.
Goodwill and Other Acquired Intangible Assets
The Company initially records goodwill and other intangible assets at their estimated fair values and reviews these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment, historically during our fourth quarter.
Recently Issued Accounting Pronouncements
In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.
Note 3 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $5,871,593($10,051,875) as of September 30, 2020.March 31, 2021. The Company also had negative working capital of $835,673 at that date.($2,207,454) on March 31, 2021, and had an operating losses of ($570,614) for the three months ended March 31, 2021. To date, these losses and deficiencies have been financed principally through the issuance of common stock, loans from related parties and from third parties.
In view of the matters described, above, there is substantial doubt as to the Company’s ability to continue as a going concern without a significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next 12 months. To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations, we intend to do so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that any such financings willwould be forthcoming, or as to the terms of any such financings. Any future financing willmay involve substantial dilution to existing investors.
Note 4 - INVESTMENTS
During the year ended December 31, 2019, the Company issued 400,000 share of preferred class B stock in exchange for 210,000,000 shares of Mobicard Inc. The shares were valued at the market price of $0.0023 per share, or $483,000, at the acquisition date. The shares are currently valued at the market price of $0.0015$0.0008 per share at September 30, 2020on March 31, 2021 for a total investment of $155,780, resulting in a loss of $268,220.$168,000.
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During the year ended December 31, 2019, the Company received 1,000,000 shares of Kanab Corp.KANAB CORP. for consulting services provided by the Company’s CEO, Vikram Grover. The shares were valued at $0.0001 per share.
During the month of September,On October 19, 2020, the Company issued 160,851 Preferred Series B shares as deposit onacquired 100% of the Purchasemember interests of Purge Virus, LLC. The shares wereLLC for consideration of 2,000,000 Series B Preferred Shares, valued at $0.40 per share for atheir market value of $64,340. The transaction closed in October$800,000. As a result of 2020.
On September 22, 2020,the acquisition, the Company issued 100,000 sharesrecognized intangible assets of $225,000 and goodwill of $596,906. The intangible assets are being amortized over their useful lives, ranging from 3 to 10 years.
Note 5 – VEHICLE DEPOSITS
Based on recent conversations with Aoxin and former management, we took an impairment charge for the vehicle deposit of $24,405.00 and wrote this asset down to $0 in the fourth quarter of 2018. Further, during the year ended ended December 31, 2019, we terminated all discussions and agreements with Aoxin Motors and exited the market for importation of electric vehicles from China.
Note 6 – LICENSE AGREEMENT
In 2012 and 2013, the Company made a total payment of $50,000.00 in connection with an executed exclusive license agreement with Aoxin to import, assemble and manufacture an advanced carbon fiber electric vehicle called the “e-Go”. The cost of this license agreement was recognized as a long-term asset and was evaluated for impairment losses at the end of each reporting period. As of March 31, 2018, impairment losses related to this license of $50,000 were identified by management, and as a result we wrote off the value of the Aoxin license. During the year ended December 31, 2019, we terminated all discussions with Aoxin regarding importation of electric automobiles and related parts and equipment from China into the United States.
Note 7 – LOANS PAYABLE DUE TO RELATED–RELATED PARTIES TRANSACTIONS
As of September 30, 2020, all related party loansMarch 31, 2021, the Company subsidiary’s chief executive officer had an outstanding balance of $7,532. The loan is non-interest bearing and associated interestdue on demand.
On March 6, 2019, Vikram Grover was appointed our President, Chief Executive Officer, Chief Financial Officer, Secretary and penalties were converted intoDirector. Mr. Grover’s compensation consists of $12,500 per month, of which $5,000 is payable in cash while the Company is delinquent in its SEC filings and the balance to be accrued and payable in cash or stock on December 31 of each calendar year. Upon bringing the Company current with its SEC filings, Mr. Grover will be compensated $12,500 per month, of which $7,500 is payable in cash and $5,000 will be accrued and payable in cash or stock on December 31 of each calendar year. Additionally, upon bringing the Company current with its SEC filings, Mr. Grover was to be issued 100 million common equity. Current management has demanded documentation of the providence of these loans. Management is reviewing legal options for recovery of these sharesstock purchase warrants with a $0.001 exercise price and has placed a stop action order on these shares withthree-year expiration. If the Company’s transfer agent. At September 30, 2020 there were no outstanding loanscommon stock closed over $0.01 for 10 consecutive trading sessions, Mr. Grover was to related parties.be issued an additional 100 million common stock purchase warrants with a $0.001 strike price and a three-year expiration. Subsequently, Mr. Grover waived his rights to these options.
Note 8 –6 - CONVERTIBLE NOTE PAYABLES
The Company had convertible note payables with severalthree third parties with stated interest rates ranging between 10% and 12% and 22% default interest not including penalties. These notes have a conversion feature such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion demands; accordingly, the conversion option has been treated as a derivative liability in the accompanying interim financial statements. As of DecemberMarch 31, 2019,2021, the Company had the following third-party convertible notes outstanding:
| Lender | Origination | Maturity | Amount | Interest | ||||||||||
| Note #1* | Auctus | 1/6/17 | 2/6/18 | $ | 37,673 | 22.0 | % | |||||||
| Note #2* | Crown Bridge | 9/15/17 | 9/15/18 | 3,240 | 10.0 | % | ||||||||
| Note #5* | Jabro 1 | 7/23/18 | 4/30/19 | 21,000 | 12.0 | % | ||||||||
| Note #6* | Jabro 2 | 10/01/18 | 7/15/19 | 11,500 | 12.0 | % | ||||||||
| Note #8* | PowerUp 10 | 3/08/19 | 01/15/20 | 21,000 | 22.0 | % | ||||||||
| Note #9* | Other | 3/16/17 | 4/1/18 | 10,000 | ||||||||||
| Note #10* | Tri-Bridge | 3/15/19 | 9/15/19 | 2,286 | 12.0 | % | ||||||||
| Note #11* | PowerUp 11 | 7/9/19 | 4/30/20 | 35,000 | 12.0 | % | ||||||||
| Note #12 | GS Capital | 9/6/19 | 9/6/20 | 28,900 | 12.0 | % | ||||||||
| Note #13 | GS Capital | 11/21/19 | 11/21/20 | 18,000 | 12.0 | % | ||||||||
| Note #14 | PowerUp 12 | 11/21/19 | 11/21/20 | 18,000 | 12.0 | % | ||||||||
| Total | $ | 206,599 | ||||||||||||
| less discount | (63,350 | ) | ||||||||||||
| Net | $ | 143,249 | ||||||||||||
| Lender | Origination | Maturity | Amount | Interest | ||||||||||||||
| Note | GS Capital | 01/20/21 | 01/20/22 | 205,000 | 12.0 | % | ||||||||||||
| Total | $ | 205,000 | ||||||||||||||||
| less discount | 0 | |||||||||||||||||
| Net | $ | 205,000 | ||||||||||||||||
*Note is currently in default.
Note #1, issued on January 6, 2017, is in default and under the terms of the convertible promissory note, the Company is liable to pay 150% of the then outstanding principal and interest plus additional penalties for certain covenants that are breached. In addition to the note balance of $62,972 as of June 30, 2020, there are potential additional penalties and damages sought by the lender, which has filed a civil lawsuit against the Company. In October 2019 which was subsequently settled for $260,000.
During the nine monthsyear ended September 30,December 31, 2020, third-party lenders converted $85,386$809,292 of principal and interest into 1,098,776,1812,936,347,316 shares of common stock.
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During the three months ended March 31, 2021, third-party lenders converted $563,643 of principal, interest and penalties into 905,435,038 shares of common stock.
The variables used for the BinomialBlack-Scholes model are as listed below:
| ● | Volatility: 253% - | Volatility: | ||
| ● | Risk free rate of return: 1.24%- 1.53% | Risk free rate of return: | ||
| ● | Expected term: 1-3 years | Expected term: |
The Company amortized a debt discount of $0 and $13,476$63,350 respectively, during the ninethree months ended September 30, 2020March 31, 2021 and year ended December 31, 2019 respectively,2020, respectively.
On October 28, 2020, a third-party lender funded the Company $115,000.00 in a 12% convertible debenture due October 28, 2021. The transaction netted the Company $98,000.00 after original issue discount (OID) of $15,000.00 and $0 and $165,846, respectively duringplacement agent fees of $2,000.00.
On January 20, 2021, a third-party lender funded the nineCompany $205,000 in a 12% convertible debenture due January 20, 2022. The transaction netted the Company $180,000 after $25,000 loan fees.
During the three months ended September 30, 2020March 31, 2021 third-party lenders converted $563,643 of principle, interest and year ended December 31, 2019, respectively.penalties into 905,435,038 shares of no-par common stock
Note 97 – COMMITMENTS AND CONTINGENCIES
Industrial Lease
Effective March 1, 2014, the Company signed a lease for four thousand square feet of industrial space in North Las Vegas. The term of the lease was for three years and cost $2,200 per month. The lease expired on April 30, 2017 and the Company was on a month to month lease thereafter. The lease was terminated as of June 30, 2018.
Rent expense amounted to $0 and $0 for the year ended December 31, 2019 and 2018, respectively. Rent expenses amounted to $0 and $13,400 for the year ended December 31, 2019 and 2018, respectively.
Aoxin License Agreement
Pursuant to a 2012 license agreement and 2017 amendment executed between the Company and Aoxin, in order to maintain exclusive rights for the United States (US), the Company was required to purchase and sell certain amount of e-Go model vehicles per year for a certain period of time starting from the completion of the requirements established by the United States Department of Transportation’s protocols for the e-Go. As part of the license agreement, the Company was committed to pay expenses related to any required airbag testing procedures.
Aoxin has been unable to procure a license to design, test and manufacture e-Go vehicles in China. Additionally, our representatives in China have been told by Aoxin that any such agreement and amendment has expired. Given these circumstances, during the three-month period ended March 31, 2018, we wrote down the value of the Aoxin license to $0 and associated vehicle deposits were fully impaired during the fourth quarter of 2018. During the year ended December 31, 2019, based on failure to perform including a lack of a license to manufacture and export electric vehicles under our Agreement with them, we terminated all discussions and agreements with Aoxin Motors.
Legal Proceedings
The Company may from time to time, become a party to various legal proceedings, arising in the ordinary course of business. The Company investigates these claims as they arise. A third-party lender, Auctus Fund, LLC, servedThere is no litigation outstanding as of March 31, 2021.
COVID-19 Pandemic Update
In March 2020, the Company noticeWorld Health Organization declared a global health pandemic related to the outbreak of a civil lawsuit on November 1, 2019 seeking principal, interestnovel coronavirus. The COVID-19 pandemic adversely affected the company’s financial performance in the third and penaltiesfourth quarters of $283,000.00 related to a loan providedfiscal year 2020 and could have an impact throughout fiscal year 2021. In response to the Company on or around January 6, 2017. Management is in discussions with Auctus Fund’s counselCOVID-19 pandemic, government health officials have recommended and workingmandated precautions to resolvemitigate the matter amicably, though there can be no assurances.
Note 10 – REVOLVING LINE OF CREDIT- RELATED PARTY
During 2018, the Company had a revolving line of credit agreement with a related party. The line amount was $100,000.00 and carried interest at 12% per annum, due on December 31, 2018 with a conversion option into restricted common stockspread of the Company. The note was convertible at 50%virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. There is uncertainty around the duration and breadth of the Average Market Price forCOVID-19 pandemic, as well as the 15 previous trading days before the conversion notice date.
During the year ended December 31, 2019, the Company made cash payments totaling $0 to principal and accrued interest. As of December 31, 2019, the balance outstandingimpact it will have on the loan was $0 as all remaining principal, interestcompany’s operations, supply chain and penalties due on the loan were converted into common shares during the fourth quarter of 2018.
Current management has demanded documentation of the providence of these loans. Management is reviewing legal optionsdemand for recovery of these shares and has placed a stop action order on these shares with the Company’s transfer agent.
Note 11 – EQUITY
During the year December 31, 2019, third-party lenders converted $249,524 of principal and interest into 1,340,868,131 shares of common stock.
On March 6, 2019, our Board of Directors approved, and we filed a Certificate of Determination for with the Secretary of State of California, a new class of Series C Preferred Shares with a total of one million such shares authorized. Each share converts into one common share, has 10,000 votes on every corporate matter requiring a shareholder vote, has a par value of $0.0001, and pays an annual dividend at the option of the Company of $0.01. Subsequent to the end of the three months ended March 30, 2019, the Company issued one million Series C Preferred Shares to our CEO, Vikram Grover, as consideration for the change of control of the Company.
On March 8, 2019, a third-party loaned the Company $28,000.00 in a 12% debenture that matures on January 15, 2020. The transaction netted the Company $25,000.00 after legal fees and due diligence expenses.
On April 7, 2019, our Board of Directors approved the creation of a new class of Series B Preferred Shares. A total of six million such shares were authorized. Each share converts into 1,000 common shares, votes on an as converted basis, has a par value of $0.001, and pays a cumulative annual dividend in cash or in kind of $0.01.
On April 8, 2019, we amended the terms of our existing Series A Preferred stock by changing the par value from nil to $0.0001 and establishing a $0.01 per share annual dividend to be approved by our Board of Directors each year. Each share remains convertible into one common share and has 50 votes on corporate matters. As part of the management transition plan announced in March 2019, two million Series A Preferred Shares were transferred from former owners to our current CEO, Vikram Grover. A total of three million Series A Preferred Shares are authorized, all of which are currently issued and outstanding. The financial statements were retroactively adjusted to give effect to this change in par value.
On April 22, 2019, we executed a letter of intent (LOI) to invest in and partner with ERide Club Corp. (ECC), a Company developing an Internet-based cloud platform to enable rentals and related services for the electric vehicle (EV) market, including automobiles, eBikes and mobilityits products. Upon delivery of a working beta system vetted by businesses, consumers and third-party testing, we will issue ECC 100,000 Series B Preferred shares convertible into 100 million common shares in return for 10% of the equity of ECC, with a right of participation on future financings by ECC through year-end 2020. Additionally, we will become a preferred marketing partner of ECC in the United States and provide ECC with a three-year option to perform a spin-out IPO to our shareholders. ECC expects to launch a first-generation version of the platform during 2019, after which time we will vet the system with our staff and advisors. The transaction is currently on hold pending our efforts to remain current in our filings and raise capital to fund our own operations.
On May 5, 2019, 2050 Motors, Inc. executed a Securities Purchase Agreement with our CEO, Vikram Grover, for an investment in the Company of $483,000 in the form of 210,000,000 free-trading common shares of Peer to Peer Network aka Mobicard Inc. The transaction closed on May 15, 2019. As consideration, the Company issued the investor 400,000 newly created 1% Cumulative Series B Preferred Shares, each of which bears a RESTRICTED CONTROL STOCK legend, is convertible into 1,000 common shares, and has 1,000 votes on corporate matters.
On May 13, 2019, the Company borrowed $12,500.00 pursuant to a convertible note agreement bearing an interest rate of 12% per annum and with a maturity date of September 15, 2019.
On May 14, 2019, our Board of Directors approved the dissolution of our wholly-owned subsidiary, 2050 Motors, Inc., a Nevada corporation doing business under the same name as our publicly traded company, 2050 Motors, Inc., a California corporation. Additionally, our Board of Directors approved the termination of any and all discussions and prior agreements with Aoxin Motors regarding the importation of electric vehicles to be made by Aoxin Motors in China into the United States. Our termination was driven by Aoxin Motors’ failure to obtain the necessary license(s) to manufacture e-GO electric vehicles, which have been under development since 2012. Accordingly, on May 14, 2019, we filed paperwork with the Secretary of State of Nevada to dissolve our wholly owned subsidiary, 2050 Motors, Inc., a Nevada corporation, and that dissolution went effective on or around May 17, 2019.
On May 15, 2019, based on due diligence and research by management and the Company’s advisors, the Board of Directors of 2050 Motors, Inc., a California corporation, approved stop action orders on 162,846,149 common shares held by former management, employees, affiliates and representatives of the Company. Accordingly, management has directed the Company’s transfer agent to prohibit the transfer or sale of any shares associated with their certificates. Pending investigation of the providence of these shares and proof of consideration for said shares, these shares will remain frozen indefinitely and subject to the Company’s powers of enforcement and the rules of law.
On July 9, 2019, a third-party lender funded the Company $35,000.00 in the form of a 12% convertible debenture that matures April 30, 2020. The transaction netted the Company $32,000.00 after legal fees and due diligence expenses.
During the nine months September 30, 2020, third-party lenders converted $85,386 of principal and interest into 1,098,776,181 shares of common stock.
On August 26, 2020, the Company issued its, CEO, Vikram Grover, 125,000 Series B Preferred Shares for accrued compensation of $50,000.00.
On August 27, 2020, a third-party lender converted $6,100.00 principal and $947.93 interest of a convertible debenture into 128,144,181 restricted common shares. On August 31, 2020, a third-party lender converted $2,950.00 principal and $500.00 of fees of a convertible debenture into 115,000,000 common shares.
On September 3, 2020, the Company issued its CEO, Vikram Grover, 1,370,065 Restricted Series B Preferred shares for accrued compensation of $137,065.00.
On September 4, 2020, a third-party lender converted $57.96 principal, $2,811.59 intertest and $500.00 of fees of a convertible debenture into 112,318,333 common shares.
From September 10, 2020 through October 8, 2020, a third-party lender converted $25,000.00 warrants attached to a 2017 loan into 611,005,229 common shares. As a result, the debenture and warrants were retired.ultimate impact on the company’s business, financial condition or operating results cannot be reasonably estimated at this time.
On September 30, 2020, a third-party lender converted $20,229.66 principal and $6,743.22 interest of a convertible debenture into 179,819,200 common shares.
During September 2020, The Company issued 250,000 restricted Series B Preferred shares for services at par value.
On September 3,June 4, 2020, the Company issued 160,851 restricted Series B Preferred shares asentered a deposit$11,593 note payable to Bank of America, pursuant to the Paycheck Protection Program (“PPP Loan”) under the CARES Act. The loan remains outstanding but is expected to be forgiven by the U.S. government based on guidance from the Company’s commercial bank, Bank of America. The SBA forgave this loan subsequent to quarter end.
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Note 8 – INCOME TAXES
The Company did not file its federal tax returns for purchasefiscal years from 2012 through 2020. Management at year-end 2020 believed that it should not have any material impact on the Company’s financials because the Company did not have any tax liabilities due to net loss incurred during these years.
Based on the available information and other factors, management believes it is more likely than not that any potential net deferred tax assets on March 31, 2021 and December 31, 2020 will not be fully realizable. The Company is current with franchise tax board fees due to the State of Purge Virus, LLC at par value.
On September 22, 2020, we issued John Kelly, owner of PPE Source International LLC (PPESI), a provider of PPECalifornia and intends to small, mediumprepare tax statements for the federal and large businesses, institutionsstate requirements for 2020. Today, the Company is current with its federal and government customers, 100,000 Series B Preferred Shares valued at $0.10 per share for a total value of $10,000, for a 180-day exclusive option to purchase his 100% member interests in PPESI.state tax filings.
Note 129 – WARRANTS AND OPTIONS
AsAt March 31, 21021 and December 42, 2020, a total of December 31, 2019,1,163,660,714 and 713,571,428 warrants were outstanding, respectively
On March 20, 2021 the Company has thirty million warrants with an exercise price of $0.01 and a three-year expiration issued and outstanding to three members of our Advisory Board who were added to that newly created committee during March - April 2019. Additionally, we issued ten million100,000,000 warrants with a strike price of $0.005$0.01 and a three-yearfive-year expiration to EDGE FiberNet, Inc.Online Energy Manager as compensationconsideration for strategic consulting. Further, our CEO, Vikram Grover, was to bea software license.
On March 31, 2021 The Company issued 100 million50,000,000 warrants with a strike price of $0.001 upon bringing$0.01and an three-year expiration to Energy Intelligence as consideration on the asset purchase.
Note 10 – EQUITY
During the three months ended March 31, 2021 third-party lenders converted $563,643 of principle, interest and penalties into 905,435,038 shares of no-par common stock
On January 21, 2021 the Company currentissued a third-party lender 10,000,000 shares of no-par common stock for loan cost of $20,000.
On February 27, 2021, the Company issued a consultant 300,000 shares of no-par common stock for investor relations services of $4,140.
On March 1, 2021, the Company issued a consultant 6,250,000 shares of no-par common stock for consulting services of $95,500.
On March 31, 2021, the Company sold 65,000,000 shares of common no-par stock for $250,00, as part of an equity line of credit
During February 2021 the Company sold 2,750,000 Series A Preferred shares for $275,000.
On January 1, 2021, the Company issued a consultant 25,000 Series B Preferred shares for services valued at $5,500.
On January 6, 2021, the Company issued 175,000 Series B Preferred shares as a non-refundable deposit to purchase SmartGuard valued at $38,500.
On January 6, 2021, the Company issued 175,000 Series B Preferred shares as a refundable deposit to purchase SmartGuard.valued at $38,500
On February 11, 2021, the Company issued 100,000 Series B Preferred shares as a non-refundable deposit to purchase PVBJ valued at $80,000.
On February 24, 2021, the Company issued 250,000 Series B Preferred shares to purchase assets of Independence LED Lighting LLC valued at $80,000.
On March 20, 2021, the Company issued 125,000 Series B Preferred shares to purchase the assets of Energy Intelligence Center LLC valued at $265,000.
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Note 11 – ACQUISITIONS
PPE Source International LLC
On October 2, 2020, we issued the owner of PPE Source International LLC (PPESI), a provider of PPE to small, medium, and large businesses, institutions, and government customers, 100,000 Series B Preferred Shares for a 180-day exclusive option to purchase his 100% member interests in PPESI. We are in negotiations to extend this purchase option.
Purge Virus, LLC
On October 19, 2020, we closed the acquisition of 100% of the member interests of Purge Virus, LLC from Charles Szoradi for consideration of two million (2,000,000) Series B Preferred Shares. The purchase maintains PV as a 100% owned subsidiary of FOMO CORP., includes cross-selling relationships with its SEC reporting requirements,Mr. Szoradi’s 100% owned LED company Independence LED and 33% owned energy management software company Energy Intelligence Center (EIC), and JV partner Company PPE Source International LLC.
Independence LED Lighting, LLC
On January 3, 2021, the Company offered to purchase 100% of the assets of Independence LED Lighting, LLC (“ILED”) for 250,000 1% Series B Preferred Shares and the assumption of critical vendor liabilities, subject to customer due diligence and legal review. ILED is an entity controlled by Charles Szoradi, CEO of FOMO’s Purge Virus LLC subsidiary acquired on October 19, 2020. The letter of intent (LOI) was approved by ILED’s Board of Directors and signed by Szoradi on January 5, 2021. On February 12, 2021, the Company closed the asset purchase of Independence LED Lighting, LLCfor total consideration of 250,000 Restricted Series B Preferred Shares and the assumption of no debt. The assets were recorded at the fair value of the Series B Preferred shares of $660,000.
Energy Intelligence Center, LLC
On March 6, 2021, we completed an Asset Purchase Agreement to acquire 100% of the assets of Energy Intelligence Center, LLC. The Company paid Energy Intelligence 125,000 Series B Preferred Shares and 50,000,000 Common Stock Warrants with 3-year exercise term and an additional 100 millionexercise price one cent. The assets were recorded at the fair value of the Series B Preferred shares and warrants of $361,995.
Online Energy Manager, LLC
On March 4, 2021, the Company signed a Licensing/ Strategic Agreement with Online Energy Manager, LLC (“OEM”). Under the agreement, OEM granted the Company a striketwo-year non-exclusive right to license ENCORE-CI, the patented and other intellectual property of OEM. The Company shall pay a license fee of 7.50% of gross revenue per project for ENCORE-CI projects. The license is renewable beyond the two-year term if the Company generates a minimum of $100,000 in license fees in the second year.
OEM granted the Company a three year option to purchase the assets of OEM for a cash payment of $10,000,000 and a two year option to purchase 19.90% of OEM Membership Units for a cash payment of $2,000,000.
As consideration, the Company granted OEM a five year warrant to acquire 100,000,000 shares of the Company’s stock at an exercise price of $0.001 due upon our common$0.010 per share. If the shares are registered and the stock closingcloses over $0.03 per share for 20 sessions out of the prior 30 sessions, the warrants shall be callable. The warrants were valued at or above $0.01 for ten consecutive trading sessions. $194,000.
SmartGuard Holdings LLC
On July 22, 2019,January 5, 2021, the Company and the principals of SmartGuard Holdings LLC entered into a six-month exclusive Agreement to explore acquisition of, investment in and/or partnership with 100% of SmartGuard Holdings LLC, consisting of:
| ● | 75% interest in SmartGuard Financing LLC, which is the exclusive sales and financing arm for an expanding portfolio of SmartGuard Disinfection & Robotic Products consisting of a disinfection robot, disinfection locker and cart wash plus 100% of the income from the financing of Cyberclean Systems, LLC’s robotic products. |
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| ● | 25% interest in GNW Technologies LLC (owner of Cyberclean Systems, LLC) plus an option to acquire an additional 25.1% of GNW. Cyberclean’s revenues consist of robot deployment revenues (80% of total) and RaaS (Robots as a Service) and EaaS (Energy as a Service) revenues (20% of total) | |
| ● | 100% of SmartGuard Energy Solutions LLC including 100% interest in LED Funding LLC, whose revenues are derived from installation of LED lighting and energy efficiency control. |
Consideration for the Agreement was brought current with regard175,000 1% Series B Preferred Shares, valued at $17,500.
Ecolite Holdings LLC
On January 10, 2021, the Company offered to its SEC reporting requirements,purchase 100% of the Member Interests of Ecolite Holdings LLC (“Ecolite” for the following consideration: 1) 2,549,383 Restricted 1% Series B Preferred Shares, 2) $2,000,000 cash, 3) $750,000 two-year 8% redeemable seller note, 4) a three-year earn-out of annual profits greater than $960,000, and as5) stock option grants to key employees in admin and sales/marketing. Ecolite is an entity controlled by John Kelly, a result,FOMO Advisory Board member and owner of PPE Source International LLC (“PPESI”), a business partner of FOMO’s wholly owned subsidiary Purge Virus LLC (“PV”). The letter of intent (LOI) was approved by FOMO’s Board of Directors and executed by John Kelly and FOMO’s CEO on January 10, 2021.
Other
On February 7, 2021, the initial 100 million warrants are dueCompany extended an offer to be issuedacquire a nationwide HVAC services contractor. Consideration will include 650,000 restricted Series B Preferred Shares, $1,000,000 cash and a $500,000 two-year seller note. The Company has extended the deadline to Vikram Grover. Vikram Grover, our CEO, has forfeited any rightclose a definitive agreement to receive the 100 million warrantsacquire a national HVAC services contractor to be issued for bringing the company current in its filings.July 1, 2021.
Note 1311 – SUBSEQUENT EVENTS
On October 20, 2020, a third-party lender converted $0 principal, $86.40 interest and $30,237.55 penalties related to a convertible debenture into 202,159,667 common shares.
Effective October 25, 2020,April 9, 2021, the Company andissued a third party lender amended a prior settlement agreement effected in 2019 to require the issuance of seven hundred ninety four million, forty one thousand, one hundred thirty three (794,041,133) Settlement Shares of common stock, as follows: a) publicly tradeableconsultant 6,250,000 shares of common stock (the “Settlement Shares” or the “Shares”) to be converted, transferred and delivered to the third party lender, in whole or in part pursuant to the third party lender’s notice: 1) on or before November 1, 2020 – 264,680,377 Settlement Shares, in whole or in part as determined by the third party lender, in its discretion; plus 2) on or before December 1, 2020 – 264,680,378 Settlement Shares, in whole or in part as determined by the third party lender, in its discretion; plus 3) on or before January 1, 2021 – 264,680,378 Settlement Shares, in whole or in part, as determined by the third party lender, in its discretion. Remaining shares, which have already been reserved, will settle the balance of the November 2019 $283,000.00 lawsuit brought by the third-party lender against the Company. The lender has subsequently executed two conversions of principal, interest and penalties into 435,086,069no-par common shares (below).for consulting services.
On November 2, 2020, a third-party lender converted $10,944.39 principal, $93.60 interest and $20,799.13 penalties related to a convertible debenture into 212,247,469 common shares.April 24, 2021, the Company issued 2,300 Series B Preferred shares for consulting services.
On October 28, 2020,April 20, 2021, the Company issued 25,000 Series B Preferred shares for consulting services relating to Kanab Corp.
On April 8, 2021, a third-party lender funded the Company $115,000.00$103,500 in a redeemable22% convertible note, netting $98,000.00debenture due April 8, 2022. The transaction netted the Company $100,000 after an original issue discount (OID) of $10,000.00, legal fees of $5,000.00 in legal fees and $2,000.00 in broker$3,500 loan fees.
On December 2, 2020, a third-party lender converted $55,709.65 penalties relatedApril 16, 2021, the Company extended the LOI’s to a convertible debenture into 222,838,600 common shares.
Business Developmentpurchase Ecolite and Related
On March 10, 2019, Aldo Baiocchi joined the Company’s Advisory Board to guide the Company’s growth of electric vehicle ventures. As compensation, Aldo Baiocchi was issued 10 million incentive common stock purchase warrants with a strike price of $0.01 and three-year expiration. On December 3, 2020, Aldo Baiocchi resigned from the Company’s Advisory Board.
On March 10, 2019, Ted Flomenhaft joined the Company’s Advisory Board to guide the Company’s growth of technology and communications ventures. As compensation, Ted Flomenhaft was issued 10 million incentive common stock purchase warrants with a strike price of $0.01 and three-year expiration. On or around March 31, 2020, Mr. Flomenhaft resigned from the Company’s Advisory Board.
On March 19, 2019, we engaged EDGE FiberNet, Inc. for consulting, support and back office services to assist us in development of our planned businesses in communications, electric vehicles, lighting, including power over Ethernet and LED, and other mediums. As part of the Agreement, we received an option on 4,000 square feet of office/retail space at EDGE FiberNet’s headquarters in Industry City, Brooklyn, New York. As compensation, we issued EDGE FiberNet ten (10) million common stock purchase warrants with a strike price of $.005 and a three-year expiration.PPE Source International LLC until July 1, 2021
On April 12, 2019, Michael Shevack joined14, 2021, the Company’s Advisory BoardCompany signed an agreement to guide the formation of an Environmental, Socialpurchase 100% interest in Lux Solutions LLC for $5,000,000. The purchase price is payable $1,250,000 in cash, $1,250,000 note payable and Governance (“ESG”) Division. As compensation, Shevack was issued ten (10) million incentive common stock purchase warrants with a strike price of $0.01 and three-year expiration. On August 22, 2019, Mr. Shevack resigned from the Company’s Advisory Board and his warrants were canceled.1,250,000 series B Preferred shares at $.002 per share.
As part of its management transition plan, on or around March 6, 2019,On April 14, 2021, the Company agreedsigned an agreement to transfer to prior Management eighty (80) percent ownership of its Nevada subsidiary, 2050 Motors (“2050 Private” or “TFPC”)purchase 100% interest in exchangeLED IV Funding LLC for a corporate$7,000,000. The purchase price is payable $1,750,000 in cash, $1,750,000 note from TFPC in the amount of fifty thousand dollarspayable and 1,750,000 series B Preferred shares at 8% interest$.002 per annum to be paid out of net profits. 2050 Motors (2050 Public) agreed to appoint William Fowler as President of 2050 Private to raise operating capital for expenses to negotiate terms and conditions to maintain Exclusive License with Aoxin Motors. Subsequent to the change of control and based on due diligence on TFPM and the status of the Aoxin Motors relationship, on or around April 2, 2019, we terminated the transaction as we deemed that it was not in the best interests of shareholders. We continued to demand information regarding TFPC from former management but have received unresponsive and unsatisfactory responses to our inquiries.share.
On May 2, 2019, we engaged Markup Designs Pvt. Ltd. (“MDPL”; https://www.markupdesigns.com),April 22, 2021, the Company issued Brokerwebs LLC 25,000 Series B Preferred shares as a global Web and mobile application development company, to design and build aretainer for one-year administration of its cannabis social network Kanab Club 2.0 @ www.kanab.club which is currently under beta testing and expected to be named “KANAB.CLUB” (www.kanab.club) targeting the global cannabis market. On May 13, 2019, we completed an initial payment to MDPL, mandating them to deploy a home page with launch information and sign-up capabilities for customers and to complete a working Web platform duringgo live summer 2019. After coding industry-standard social media functionality, we intend to add an online marketplace, 420 dating services, discussion forums, rewards programs/points including potential utility crypto coins, differentiated advertising and navigation capabilities (www.linkstorm.net), and Android/iOS mobile applications to the platform.2021.
On May 9, 2019,18, 2021, the Company appointed Charles Szoradi to its Advisory Board. Mr. Szoradi was issued ten (10) million common stock purchase warrants withincorporated FOMO FOMO ADVISORS LLC, a $0.01 strike price and three-year expiration, which were subsequently canceled bur reinstatedWyoming limited liability company, as part of the Purge Virus, LLC acquisition at a strike price of $0.001. As part of the October 19, 2020 acquisition of 100% of the member interests of Purge Virus, LLC from Mr. Szoradi, the Company will appoint him to the Board of Directors upon retention of Directors and Officers insurance (D&O).wholly owned public/private merchant banking subsidiary.
On May 14, 2019, to eliminate any confusion regarding the future direction of18, 2021, the Company and to provide transparency and clarity for our investors, our Board of Directors approved the dissolution of our wholly owned subsidiary, 2050 Motors, Inc.restored FOMO CORP. (private), a Nevada corporation doing business underWyoming C-Corp. by the same name, to good standing. Management intends to utilize the vehicle as our publicly traded company at the time, 2050 Motors, Inc., a California corporation. Additionally, our Board of Directors approved the termination of any and all discussions and prior agreements with Aoxin Motors regarding the importation of electric vehiclesstrategic asset to develop cryptocurrencies to be made by Aoxin Motors in China into the United States. Our termination was driven by Aoxin Motors’ failure to obtain the necessary license(s) to manufacture e-GO electric vehicles, which have been under development since 2012. Accordingly, on May 14, 2019, we filed paperwork with the Secretary of State of Nevada to dissolve our wholly owned subsidiary, 2050 Motors, Inc., a Nevada corporation,named “FOMO COIN” and that dissolution went effective on“KANAB COIN” or around May 17, 2019.
On October 12, 2019, we appointed Dr. Wayman Baker, PhD, a scientist previously employed by the National Weather Service, to the Advisory Board. As a result, we issued Dr. Baker, ten (10) million common stock purchase warrants with a strike price of $0.01 and a three-year expiration, whose strike price was subsequently amended to $0.001 in 2020.
On October 9, 2020, the Company issued its CEO, Vikram Grover, 93,750 Series B Preferred Shares for accrued compensation of $37,500.
On October 19, 2020, we closed the acquisition of 100% of the member interests of Purge Virus, LLC from Charles Szoradi for consideration of two million (2,000,000) Series B Preferred Shares. The purchase maintains PV as a 100% owned subsidiary of FOMO CORP., includes cross-selling relationships with Mr. Szoradi’s 100% owned LED company Independence LED and 33% owned energy management software company Energy Intelligence Center (EIC), and JV partner Company PPE Source International LLC.
On December 6, 2020, we appointed Paul Benis, a 30-year veteran of the industrial HVAC market, technology executive and owner of PVBG Inc, to the Advisory Board. As part of the appointment, we issued Benis ten (10) million common stock purchase warrants with a strike price of $0.001 and a three-year expiration.
COVID-19 Pandemic Update
In March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19 pandemic adversely affected the company’s financial performance in the third and fourth quarters of fiscal year 2020 and could have an impact throughout fiscal year 2021. In response to the COVID-19 pandemic, government health officials have recommended and mandated precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company’s operations, supply chain and demand for its products. As a result, the ultimate impact on the company’s business, financial condition or operating results cannot be reasonably estimated at this time.
On June 4, 2020, the Company entered into a $11,593 note payable to Bank of America, pursuant to the Paycheck Protection Program (“PPP Loan”) under the CARES Act. The loan remains outstanding but is expected to be forgiven by the U.S. government based on guidance from the Company’s commercial bank, Bank of America.
Warrants
On November 3, 2020, the Company reduced the strike price on 10,000,000 warrants owned by Dr. Wayman Baker, PhD, from $0.01 per share to $0.001 per share. On December 2, 2020, the Company reduced the strike price on 10,000,000 warrants owned by Aldo Baiocchi, from $0.01 per share to $0.001 per share.other.
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Item 2. Management’s Discussion and Analysis or Plan of Operation
Plan of Operations
This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
Plan of Operations
Prior to the completion of the acquisition of FOMO CORP. previously known as “2050 Motors, Inc.”, a Nevada corporation, (“2050 Motors”), on May 2, 2014, the Company had nominal assets whose sole business was to identify, evaluate, and investigate various companies to acquire or with which to merge. Upon consummation of the transaction with 2050 Motors, the Company’s business became the business of 2050 Motors, which at the time was the Company’s sole operating subsidiary. Our principal business objective for the next 12 months will be to achieve long-term growth through the launch of new business units, subsidiaries and ventures, initially, with a business concentration in the areas of communications, electric vehicles, power over ethernet (PoE) and LED lighting, and social media.
The Company completed the acquisition of all of the issued and outstanding capital stock of 2050 Motors, Inc. on May 2, 2014. The acquisition was completed pursuant to the terms of a Plan and Agreement of Reorganization (the “Agreement”) entered into on February 5, 2014, by and between the Company, 2050 Motors and Certain Shareholders of 2050 Motors. Pursuant to the terms of the Agreement, the Company acquired all of the outstanding shares of capital stock of 2050 Motors in exchange for 24,994,670 post-split shares of the Company’s common stock (aggregating approximately 82% of its issued and outstanding common stock at closing).
Historically, 2050 Motors’ principal activity was the importation and the marketing and selling of electric automobiles based on its good faith belief that 2050 Motors, Inc. had an exclusive and valid license, subject to minimum sales requirements, to import, market and sell in the United States, Puerto Rico, the US Territories and Peru, the “e-Go” lightweight carbon fiber all-electric vehicle design and electric light truck, manufactured by Jiangsu Aoxin New Energy Automobile Co., LTD (“Aoxin Automobile”) located in the Peoples Republic of China (“PRC”).
With respect to the time period covered in this report, 2050 Motors intended in the past to import vehicles completely fabricated and assembled in China from Aoxin Automobile. 2050 Motors intended to market the e-Go in designated markets and is not expected to need any raw materials, components or equipment, except spare parts which will be supplied by Aoxin Automobile. However, the e-Go and all of its parts and equipment must be DOT approved.
FOMO CORP. is a development stage company with no operating history and may never be able to carry out its business plan or achieve any revenues or profitability.
FOMO CORP.’s predecessor entity was established in October 2012 and has not generated any revenues, nor has it realized a profit from its operations to date, and there is little likelihood that it will generate any revenues or realize any profits in the short term. Any profitability in the future from its business will be dependent upon the successful marketing and sales of future business activities. The Company may not be able to successfully carry out its business plan. There can be no assurance that it will ever achieve any revenues or profitability. Accordingly, its prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business, especially one in the automobile industry, and therefore it is a highly speculative venture involving significant financial risk.
Since new management was appointed in March 2019, we expanded our mission statement to invest in, incubate and accelerate businesses in the communications, energy, electric vehicle, and Internet industries.
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Costs and Resources
FOMO CORP. is currently pursuing additional funding resources that will potentially enable it to maintain its current and planned operations through the next 12 months. The Company anticipates that it will need to raise additional capital in order to sustain and grow its operations over the next few years. To the extent that the Company’s capital resources are insufficient to meet current or planned operating requirements, the Company will seek additional funds through equity or debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. TheAs of March 31, 2021, the Company hashad no current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders or creditors will provide any portion of the Company’s future financing requirements. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company.
Results of Operation for the NineThree Months Ended September 30,March 31, 2021 and 2020 and 2019
During the three months ended September 30,March 31, 2021 and 2020, and 2019, the Company had no$151,392 and $0 in operating revenues. During the ninethree months ended September 30, 2020,March 31, 2021 the Company incurred $132,221 in cost of revenues. During the three months ended March 31, 2021, the Company incurred operating expenses of $314,646,$685,785, consisting primarily of G&A expenses, consulting fees and travel expenses and other general and administrative costs. For the ninethree months ended September 30, 2020,March 31, 2021, these operating losses combined with non-operating income (expenses) of $468,978$1,841,624 resulted in net incomeloss of $154,333.$2,508,238. For the ninethree months ended September 30, 2019,March 31, 2020, the Company had operating losses of $122,683$50,532 and non-operating income (expenses) of $476,733$410,242 leading to net income of $354,050.$359,710.
Equity and Capital Resources
We have incurred losses since the inception of our business and as of September 30, 2020March 31, 2021 we had an accumulated deficit of $5,871,593.$10,170,883. As of September 30, 2020,March 31, 2021, the Company had cash overdraftbalance of $114$269,002 and a negative working capital of $835,673.
$2,228,467.
To date, we have funded our operations through short-term debt and equity financing. During the three months ended September 30, 2020,March 31, 2021, the Company received no$180,000 of borrowed funds from non-related parties. In addition, during this period the Company issued no905,435,038 of common stock to lenders for conversions of $563,643 of principal and interest related to third-party debt.debt and issued 10,000,000 shares of common no-par shares for 20,000 of loan costs. The company also sold 2,750,000 shares of Preferred A shares for $275,000. The Company issued 6,550,000 shares of common no-par shares and Preferred B shares for compensation. The Company sold 65,000,000 shares of no-par common stock for $250,000. The Company also issued 175,000 Preferred B shares as a deposit for a future business purchase and 375,000 Preferred B shares to purchase the assets of a business.
We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our automobile business. However, we do not expect to start generating revenues from our operations for another 12 months. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this Report we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may be unavailable in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases or debt would increase our capital requirements and possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
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Delinquent Loans
As of September 30,March 31, 2020, the Company is no longer delinquent in its payments on any loans owing to several third-party lenders totaling $170,599 in principal, accrued interest and penalties. The Company is in discussions with these lenders to extend the maturity dates or to convert all or part into the company’s common stock. There is no assurance that these discussions will result in amicable settlements. Any legal action by any one of the lenders could have a material adverse effect on the Company and its ability to continue operations.
On November 1, 2019, the same note holder served us notice of a civil lawsuit seeking $283,000 in principal, interest and penalties for a loan made to the Company on or around January 6, 2017 in the amount of $78,750. The Company subsequently settled with this lender for $260,000 in common shares.lenders.
Off-balance Sheet Arrangements
Since our inception through September 30, 2020,March 31, 2021, we have not engaged in any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “small reporting company” we are not required to provide this information under this item pursuant to Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report on Form 10-Q, our President and Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures are not effective in timely alerting them to material information relating to 2050 Motors, Inc. required to be included in our Exchange Act filings.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
On November 1, 2019, aThe Company has settled all lawsuits with third-party lender served the Company noticelenders regarding delinquent loans as of a civil lawsuit seeking $283,000 in principal, interest and penalties for a loan provided to the Company on or around January 6, 2017 in the amount of $78,750. Both parties settled the matter for $260,000 in November 2019 and amended the settlement in October 2020.March 31, 2021
As a “smaller reporting company”, we are not required to provide this information under this item pursuant to Regulation S-K.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the ninethree months ended September 30, 2020, third-partyMarch 31, 2021, the Company received $180,000 of borrowed funds from non-related parties. In addition, during this period the Company issued 905,435,038 of common stock to lenders converted $85,386for conversions of $563,643 of principal and interest into 1,098,776,181related to third-party debt and issued 10,000,000 shares of common stock.
On August 26, 2020, the Company issued its, CEO, Vikram Grover, 125,000 Series B Preferred Shares for accrued compensation of $50,000.00.
On September 3, 2020, the Company issued its CEO, Vikram Grover, 1,370,065 Restricted Series B Preferredno-par shares for accrued compensation20,000 of $137,065.00.
On September 4, 2020, a third-party lender converted $57.96 principal, $2,811.59 intertest and $500.00loan costs. The company also sold 2,750,000 shares of fees of a convertible debenture into 112,318,333 common shares.
From September 10, 2020 through October 8, 2020, a third-party lender converted $25,000.00 warrants attached to a 2017 loan into 611,005,229 common shares. As a result, the debenture and warrants were retired.
During September 2020,Preferred A shares for $275,000. The Company issued 250,000 restricted Series6,550,000 shares of common no-par shares and Preferred B Preferred shares for services at par value.
On September 3, 2020, thecompensation. The Company sold 65,000,000 shares of no-par common stock for $250,000. The Company also issued 160,851 restricted Series175,000 Preferred B Preferred shares as a deposit for a future business purchase of Purge Virus, LLC at par value.
On September 22, 2020, we issued John Kelly, owner of PPE Source International LLC (PPESI), a provider of PPE to small, medium and large businesses, institutions and government customers, 100,000 Series175,000 Preferred B Preferred Shares for a 180-day exclusive optionshares to purchase his 100% member interests in PPESI.the assets of a business, of which half is refundable.
Item 3. Defaults Upon Senior Securities.
As of September 30,March 31, 2020, the Company wasis no longer delinquent in its payments on any loans dueowing to third-party lenders in the aggregate amount of $170,599 including principal and accrued interest. Though none of these loans are secured by any assets of the Company, they do rank as senior to other claims and, in some cases, have certain rights preventing asset sales or other corporate actions
The Company is in discussions with its lenders to extend the maturity dates or to convert all or part of the notes into the Company’s common stock. There is no assurance that these discussions will result in amicable settlements. Any legal action by any one of the lenders could have a material adverse effect on the Company and its ability to continue operations.
The Company does not currently have sufficient liquidity to repay the indebtedness. While the Company does not expect the noteholders to accelerate the indebtedness, the noteholders may do so at any time, or may initiate foreclosure actions, or seek any other remedies permitted by the terms of the notes and applicable law. Should the holders of the Company’s indebtedness seek to accelerate the indebtedness upon an event of default, the Company could be required to discontinue or significantly reduce the scope of its operations if no other means of financing its operations are or become available.
Item 4. Mine Safety Disclosures.
Not applicable.
None
(a) Exhibits.
| Exhibit | Item | |
| 10.1* | Convertible Loan Agreement GS Capital - January 20, 2021 | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*Filed herewith.
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In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FOMO Corp (Formerly 2050 MOTORS, INC.) | |
| Date: May 24, 2021 | /s/ Vikram Grover |
| Vikram Grover, President | |
| (Principal Executive Officer) | |
| Date: May 24, 2021 | /s/ Vikram Grover |
| Vikram Grover, Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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| Exhibit | Item | |
| 10.1* | Convertible Debenture Loan Agreement with GS Capital – January 20, 2021 | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
*Filed herewith.
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In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
*Filed herewith.